Free debit cards, zero account maintenance fees, and commission-free transfers create the illusion that retail banking services cost financial institutions almost nothing. In reality, the retail banking business model is far more nuanced: explicit fees are just one of several revenue streams.
The bulk of bank income comes from interest rate spreads, lending, payment processing, and cross-selling complementary products. The scale of this model is evident in Central Bank of Russia statistics: in 2025, sector-wide net interest income totaled approximately 7.6 trillion RUB, while net fee and commission income reached roughly 2.4 trillion RUB. Russian banks’ net profit for the year amounted to 3.5 trillion RUB.
- Why free account servicing benefits banks
- The interest margin: where money from accounts and deposits goes
- Who profits when a customer pays by card?
- How the Fast Payment System (FPS) reshaped fee structures
- Currency exchange: hidden profit in the exchange rate
- Loans, insurance, and other bundled products
- What does a ‘free’ bank account really cost?
Why free account servicing benefits banks
For a credit institution, a current account or debit card is not merely a standalone product—it’s a channel to build long-term relationships. Through these instruments flow salaries, savings, purchases, peer-to-peer transfers, and recurring bill payments. Over time, users may open term deposits, take out loans, purchase insurance, or use brokerage services. Therefore, account maintenance fees need not be the primary revenue source. In fact, waiving them can attract new customers and increase both the volume of funds and transaction activity within the bank’s ecosystem.
This economic logic is confirmed by regulatory data. In Q1 2026, banks’ net interest income reached 2.17 trillion RUB, while net fee and commission income stood at 585 billion RUB. The Central Bank noted that fee income grew year-on-year primarily due to charges on fund transfers.
The interest margin: where money from accounts and deposits goes
One of banks’ core revenue sources is the difference between the cost of funding and the yield on assets.
When a client opens a deposit, those funds become a liability for the bank—and part of its broader funding base. Money from various clients is pooled with other funding sources and deployed across balance sheet management: issuing loans, investing in securities, maintaining liquidity, and executing other operations.
A simplified example: a bank raises funds at an average cost of 12% per annum and earns 17% on its loan portfolio and other interest-earning assets. This spread is not pure profit: it must cover operating expenses, credit losses, provisions, taxes, and infrastructure costs. Yet this mechanism remains the foundation of interest-based banking.
To assess this, regulators and analysts use the net interest margin (NIM). In Q4 2025, the sector-wide NIM stood at 5.1%. The Central Bank attributed its growth to a faster decline in funding costs than in asset yields.
Key takeaway: Even money held in a standard non-interest-bearing account holds economic value for the bank—even if the account holder pays no maintenance fee.
Who profits when a customer pays by card?
A shopper places items on the checkout counter, taps their card, and sees the exact amount deducted. No separate charge appears—but the transaction isn’t free for the payment infrastructure.
Retailers must accept non-cash payments, process authorizations, receive cleared funds, and maintain terminals or internet acquiring solutions. For these services, merchants pay their acquiring bank a fee stipulated in their agreement.
A card transaction involves multiple parties: the merchant, its acquirer, the payment system (e.g., Mir, Visa, Mastercard), and the card-issuing bank. Thus, the full fee does not accrue solely to the bank where the buyer holds their account. The payment chain includes distinct tariffs and interbank compensation schemes.
Card-based payments remain highly significant for financial institutions—though market structure continues evolving. According to the Central Bank, non-cash transactions accounted for 88% of retail turnover in 2025. In Q1 2026, the share rose to 88.9%. Meanwhile, QR codes, the Fast Payment System (FPS), mobile payment apps, and other card alternatives are gradually gaining traction.
How the Fast Payment System (FPS) reshaped fee structures
The Fast Payment System has dramatically reduced transfer costs for individuals. Citizens can now send up to 100,000 RUB per month to another person via FPS at no charge. Beyond that limit, the maximum fee is 0.5% of the excess amount—or no more than 1,500 RUB per transaction.
Transferring one’s own funds between accounts at different banks is even more favorable: up to 30 million RUB per month moves without commission.
Yet zero cost to the individual doesn’t mean zero economics among participants. FPS applies specific tariffs for banks and businesses. As of 1 May 2026, the Central Bank’s tariff for person-to-person transfers among participating banks is zero RUB. Fixed rates apply to other transaction types.
When paying via FPS at a store, the customer bears no fee—the merchant covers the cost. For most goods and services, the maximum merchant fee is 0.4%; for others, it rises to 0.7%, subject to per-transaction caps.
The system’s scale is already substantial: in 2025, FPS processed 18.3 billion transactions worth 103 trillion RUB—1.4× and 1.5× higher, respectively, than in 2024.
Currency exchange: hidden profit in the exchange rate
Another key revenue stream is foreign exchange conversion.
Suppose a currency is bought at 90 RUB and sold at 92 RUB. The difference between these two quotes is called the spread. It covers operational costs and risks—and generates profit.
Customers should distinguish the official Central Bank exchange rate from commercial quotations used in actual trades. While the regulator sets official rates for specific purposes, it does not mandate their use as buy/sell prices for foreign currency by commercial entities. So a ‘no-fee’ exchange may still be suboptimal: if no explicit commission appears, the cost is embedded directly in the exchange rate spread.
Spreads widen notably during cash exchanges, conversions of less liquid currencies, or periods of high volatility. In such cases, comparison should focus not on advertised fees—but on the final amount received after conversion.
Loans, insurance, and other bundled products
Lending generates interest income—but borrower relationships often extend beyond a single loan. Lenders frequently bundle credit with insurance, service packages, or other ancillary offerings. Large financial groups also offer brokerage services, asset management, subscription models, and more.
Some products are issued directly by the bank; others come from third-party providers. In the latter case, the bank may act as an agent and earn a commission on sales.
It’s essential to distinguish the price of the core product from optional add-ons. The Central Bank advises borrowers to consider not only the advertised interest rate but also the Annual Percentage Rate (APR), which incorporates all legally mandated costs—including payments to third parties.
Importantly, supplementary services must never be presented as mandatory by default. Regulators actively monitor sales practices—including mis-selling, where one financial instrument is misrepresented as another. For instance, the Central Bank has identified issues involving investment-linked insurance policies distributed through banks.
What does a ‘free’ bank account really cost?
Evaluating banking costs based solely on card fees is insufficient. A truly free account imposes no cost on its owner—if they use only basic features and comply fully with tariff conditions. However, additional expenses arise elsewhere.
When selecting a financial institution, consider reviewing:
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FAQ
Do ‘free’ bank accounts really cost the bank nothing?
No—banks profit from account holders through interest rate spreads, payment processing fees, cross-selling loans or insurance, and float on deposited funds, even when no maintenance fee is charged.
Who earns money when I tap my debit card at a store?
The merchant’s acquiring bank, the payment system (e.g., Mir), and your issuing bank all receive portions of the interchange and processing fees—though the customer pays none directly.
Is currency exchange truly free if no commission is shown?
No—the absence of an explicit fee doesn’t mean zero cost; banks embed profit in the bid-ask spread between buy and sell exchange rates, especially for cash or volatile currencies.
